One of the pioneers of political economy, Adam Smith, started his famous work The Wealth of Nations by elaborating the benefits of division of labour. Smith believed that the division of labour could benefit the society as a whole from rich to the lowest members of the society (Robert & Marc). Another important figure of political economy, David Ricardo, also advocated division of labour. He developed theories of comparative advantage to argue if every countries could specialized in certain product, the globe could benefit from international trade (Robert & Marc).
Seemingly, global division of labour would brings us better quality of life by increasing productivity and utilizing resources all over the world. However, looking back at the past several decades, the exploitation of workers such as unreasonably low wage and poor working condition in developing countries is happening everyday, a common but dreadful global issue. For instance, case of Foxconn in China shocked the world with its horrible working condition to the factory workers and we indeed understand that Foxconn that was really just the tip of the iceberg. Thus, it is difficult to determine if the emergence of global division of labour is the angel or the devil in spite of its immense advantage. To think over this question, we can explore this issue from two perspectives.
Firstly, in developing countries, workers’ rights are inclined to be exploited.
With highly mobile capital and low tariffs, companies can easily exploit workers by pressuring the workers if they do not accept the inequitable offer such as low wages, poor working conditions and more, the company will move elsewhere (Seiglitz, 2013). As there is lack of working opportunities in developing countries, workers’ bargaining power is indeed low and they have no say about their treatment.
Secondly, in developed countries, welfare of unskilled workers are lowered. When developed countries can import products from developing with lower price, it would reduce the demand of unskilled worker in the local countries. Take the United States as an example, 95% of its garment was made by domestic workers until 1960s. In 2015, only 3% was produced in the United States and a staggering 97% was outsourced (Sharma, 2016). In such situation, workers in the developed countries either have to accept lower wage as to compete with workers in developing countries, or equip themselves with skills (Stiglitz, 2013) to compete for other professional job. However, it is an undeniable fact that demand of unskilled workers in developed countries would be highly reduced.
Nonetheless, if the global division of labour is really such an evil, why is it still existing and have been expanding in the past decades? Again, we can try to analyze it from the perspective of developing and developed countries.
Firstly, it created job opportunity and increased the foreign direct investment (FDI) in developing countries. Take China as an example, in 2011, it received an inflow of over US $124 billon in FDI (GPE). The massive amount of FDI undoubtedly bring a positive effect to the economy of developing countries. Without the emergence of global division of labour, more people in developing countries would be unemployed with awful living standard.
Secondly, global division of labour lowered the price of product. The main reason for corporation to set up factories in developing countries is to lower the cost of production. By lowering the cost of production through cheap labour, prices of products around us, such as clothing, electronic devices and such, are also lowered.
If the global division of labour has not appeared, price of product would have gone up, productivity would have reduced, workers in developing world would have lost the job opportunities. One of the main accusations of the global division of labour is the poor welfare and treatment. Though, the condition of workers in developing countries is already getting better. For example, average manufacturer in China only got US $1 per hour. Now, the minimum wage is doubled or even more (Winn, 2016). In general, developing countries are benefiting form global division of labour overall.
Whether division of labour an angel or devil under the context of globalization is a tough question for us. However, it is still true that division of labour can increase the productivity and benefits the world for both developed or developing countries via various means. Perhaps, it is the worst form of development except all the others that have been tried; perhaps, it is a necessary vice to maximize every one’s benefit at the moment.
Robert O’Brien, Marc Williams (2013) ‘Global Division of Labour’ in Global Political Economy: Evolution and Dynamics (Palgrave Macmillan 4th edition), pp. 182 – 199.
Eric Thun (2011) ‘The Globalisation of Production, in John Ravenhill Global Political Economy (OUP 3rd edition), pp. 345 – 368.
Stiglitz, J. E. (2012). The price of inequality: How today’s divided society endangers our future. New York: W.W. Norton & Co.
Chang, Ha- Joon (2011). 23 things they don’t tell you about capitalism. New York: Bloomsbury Press.
Patrick Winn (2016) ‘Trump says US jobs get ‘stolen’ by China. Well, here are the countries ‘stealing’ Chinese jobs.’ GlobalPost [Online] Available at: http://www.pri.org/stories/2016-09-27/trump-says-us-jobs-get-stolen-china-well-here-are-countries-stealing-chinese-jobs [Accessed 5 December 2016].
Jeena Sharma (2016) ‘Made in America’ Versus Fast Fashion’ Observer [Online] Available at: http://observer.com/2016/11/made-in-america-versus-fast-fashion [Accessed 5 December 2016].
By: Chandan RAI (M00601271)